SEC Charges Avraham Eisenberg with Manipulating Mango Markets' "Governance Token" to Steal $116 Million of Crypto Assets

Defendant, Who Was Arrested and Jailed in a Federal Prison in Puerto Rico, Is Awaiting Transport to NYC On Parallel Criminal Charges

Litigation Release No. 25623 / January 23, 2023

Securities and Exchange Commission v. Avraham Eisenberg, No. 1:23-cv-00503 (S.D.N.Y. Jan. 20, 2023)

The Securities and Exchange Commission charged Avraham Eisenberg with orchestrating an attack on a crypto asset trading platform, Mango Markets, by manipulating the MNGO token, a so-called governance token that was offered and sold as a security. Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.

Eisenberg, a 27 year-old U.S. citizen who was arrested and detained at MDC Guaynabo, Puerto Rico, is awaiting transport to appear before the Southern District of New York where he is facing parallel criminal and civil charges, brought by the Department of Justice and the Commodities Futures Trading Commission (CFTC), respectively.

According to the SEC's complaint, beginning on October 11, 2022, Eisenberg engaged in a scheme to steal approximately $116 million worth of crypto assets from the Mango Markets platform. The complaint alleges that Eisenberg, who perpetrated the scheme while living in Puerto Rico, used an account that he controlled on Mango Markets to sell a large amount of perpetual futures for MNGO tokens and used a separate account on Mango Markets to purchase those same perpetual futures. The complaint further alleges that Eisenberg then engaged in a series of large purchases of the thinly traded MNGO token for the purpose of artificially raising the price of MNGO token relative to the crypto asset USD Coin.

The complaint also alleges that, as a result of these transactions, the price of MNGO perpetual futures on Mango Markets, including those held by Eisenberg, increased. According to the complaint, Eisenberg used the increased value of his MNGO perpetual futures position to borrow and withdraw approximately $116 million worth of various crypto assets from Mango Markets, effectively draining all available assets from the Mango Markets platform.

The SEC's complaint, filed in federal district court in Manhattan, charges Eisenberg with violating the anti-fraud and market manipulation provisions of Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder, and seeks permanent injunctive relief, a conduct-based injunction, disgorgement with prejudgment interest, and civil penalties.

The SEC's ongoing investigation is being conducted by Kristin Pauley of the Crypto Assets and Cyber Unit. Additional assistance in the investigation was provided by Thomas Bedkowski of the Crypto Assets and Cyber Unit. The SEC's litigation will be led by Alyssa Qualls of the Chicago Regional Office. The matter is being supervised by Amy Flaherty Hartman, Jorge Tenreiro, David Hirsch, and Carolyn Welshhans.

The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, the FBI, and the CFTC.